Corporate Eye » Investor

What Makes for Effective Investor Relations Sites? Part 12: Remember the Debt Side of the Balance Sheet

John Palizza — Tue, 09 Mar 2010 10:27:16 +0000

Most company investor relations web sites are entirely equity oriented and ignore the company’s debt. I’m not quite sure why this is, as many companies have a significant part of their funding that is derived from the credit markets. Perhaps it comes from the fact that most corporate debt is held by institutional investors who have access to proprietary trading screens, or perhaps it derives from the fact that the banking and treasury department is often separate from investor relations, but you can look long and hard before you find much information on most companies’ web sites that relates to their debt.

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By failing to more publicly disclose this aspect of their financial structure companies are doing a disservice, certainly to retail holders of their bonds, but also to holders of their equity. Debt burden, that is, the total amount of debt your company has, is important information. As is your debt maturity schedule, which will tell investors when your debt comes due, cash flow requirements and how much immediate refunding risk you may have. Rating agency debt ratings are handy shorthand guides to a company’s overall credit quality and also merit attention. In short, there are many important items of information regarding a company’s debt that go into an investment decision, regardless of whether an investor is a debt or equity holder. Usually this information is spread out between the balance sheet, cash flow statement and regulatory filings, or sometimes, in the case of Debt Ratings, not disclosed by the company at all. It doesn’t make sense for a company to force investors to hunt for the information when the company has it readily at hand. Therefore, a well thought out section informing investors of a company’s debt profile should be included in effective investor relations web sites.

One company that does a pretty good job with their debt information is ENI, the Italian energy company. The screen shot that I have included shows a main debt page discussing their debt policy and overall debt levels. Other pages, which can be seen listed on the left of the page, debt rating, maturity (and currency) profile and the schedule of maturing debt. More companies should do this.

What Makes for Effective Investor Relations Sites? Part 11: Make Your Interim Financial Results Easily Accessible

John Palizza — Mon, 01 Feb 2010 11:45:59 +0000

If the heart of understanding a company is the ability to parse the financial statements, then the lifeblood of the company is the data flow about current results. The smooth and orderly flow of information from the company to investors should be a given, yet it is surprising how often one has to hunt for all of the relevant information. The press release will be in one spot, the conference call replay another and governmental filings yet another.

A good practice for investor web sites is to have a page where everything concerning the most recent results is in a single spot. Because different web sites choose to label information differently, this avoids investor frustration as they try to track down all the pieces of financial information they may want.

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One site that does a good job of this is BT, the telecommunications company. As can be seen in the screenshot on the right, their Results & Presentations page gives investors access to the news release, webcast, slides and KPIs (Key Performance indicators) all in one spot.

A couple of things set this page apart: first, not only can you view the webcast, but you can also download a transcript. Although transcripts do not give investors some of the flavor of management’s approach to the results, they can be reviewed more quickly than the process of viewing an entire hour’s worth of presentations. Second, transcripts are searchable for key phrases, so if in following a company you are particularly concerned with headcount or product returns or customer satisfaction levels, you can quickly search the transcript to see if the issues were addressed, again without sitting through the entire presentation.

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Another site that does a good job of consolidating information about interim reports is Marks and Spencer. The approach is slightly different, grouping the information by year, but the type of information is clearly labeled and easy to find. Of note on the M&S site are video interviews with the chairman and the Group Finance and Operations director, providing additional color on the interim results.

These are good examples of web design that thinks in terms of “What does the investor need to know?’ rather than “What do we have to disclose?”.

What Makes for Effective Investor Relations Sites? Part 10: A Graph is Worth a Thousand Data Points

John Palizza — Fri, 22 Jan 2010 14:04:02 +0000

At the heart of understanding a company is the ability to parse the financial statements, which are chock full of great information. However, one of the problems with the financial statements is that the information is scattered among the income statement, the balance sheet and the cash flow statement. A further problem with the financial statements is that they are often considered as stand alone documents, with very little interaction of the information between the income statement, balance sheet and cash flow statements. A final issue of the financials is that they are data-dense, and don’t easily give a clear picture of inter-relationships of the data and the evolving picture over time.

This is where graphs come in. Properly constructed graphs can show not only what has been happening over time, but also how various components relate and interact. So it is surprising that so few companies have web sites that help investors construct graphs from the financial data. I’m not quite sure of the reason for this. It could be that companies figure that professional investors with expensive subscription services to data have the ability to do this on their own, or it could be that they simply haven’t thought about it. In either case, I believe they are missing a great opportunity.

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By making graphing capabilities easily accessible to web site visitors, companies can make life considerably easier for investors and highlight areas that they consider important. For example, EADS, the defense contractor, creates a section on their web site entitled “Key Figures”, a screenshot of which is on the right. As you can see, the page contains plenty of data, but unless you are prepared to do a bit of analysis, either with a calculator or by reentering the data into a spreadsheet, it’s tough to get a clear picture of what is going on.

Fortunately, EADS has a function on the page called “Interactive Chart Generator” which helps. If you go to the chart generator, you can quickly construct graphs such as the one here, showing the relationship between EBIT and R&D in order to see if EADS continually reinvests for the future or whether they cut back in the tough years.

Another favorite of professional investors is to look at free cash flow generation as a double check on net income. I was able to construct the graph below with about six clicks of my computer mouse.

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All things considered, the Interactive Chart Generator is a very effective tool to help your investors quickly understand some of the key trends in your financial information.

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Ultimate Twitter Strategy Guide and Rules for IR – Corporate Tweets and Strategy

Brian — Tue, 08 Dec 2009 09:36:08 +0000

Section 1 of the Investor Relations Twitter Strategy Guide

Twitter Strategy Guide for IR Section 2 – Useful, Informative, Legally Defensible Twitter Tweets

For businesses to get value from Twitter, the company must generate a useful and informative feed of Twitter posts that compels users to “Follow” the company’s Twitter account. On the other hand, to avoid any potential problems with tweets made on Twitter, corporations must be careful not to accidentally publish misleading or misunderstood messages. Ensuring that both of these things happen on a regular basis is the crux of a useful IR Twitter strategy.

The person handling the IR Twitter postings should be an experienced professional already versed in the various rules and regulations regarding communications with investors and the general public. All the same rules that apply to phone calls, emails, letters, and in person conversations apply to messages posted to Twitter. In other words, if you can’t say it on a person-to-person phone call with the SEC’s top enforcement watchdog listening in, you can’t tweet it either!

Lastly, do not confuse the conversational nature of Twitter with actual conversation. Every post made to Twitter is in writing! If it couldn’t be typed on official company letterhead with an executive signature at the bottom, then it can’t be posted to Twitter either. This simple distinction can save IR a lot of trouble.

1) – Tweet Daily

Everyone knows Twitter is about fast real-time communication, but it also about constant communication. Twitter feeds with occasional tweets drop quickly from view. Power Twitter users follow dozens or hundreds of other users. Keeping up with all of those tweets requires users to triage the inflow. A once a week message from an account is just too likely to be skipped, missed, or buried to provide value. Don’t worry about posting tweets on weekends or holidays. No one will be surprised when a corporate Twitter stream goes dark during non-business hours.

a) How To Tweet Daily

Coming up with a new tweet every day may seem daunting at first. However, remember that Twitter’s value lies in being part of the conversation, not in just broadcasting your own communications. Responding to direct questions, responding to general statements made in the “Twitter-sphere”, and even responding to media stories or events can (and should) be part of the Twitter strategy. It can be several days or more in between each originating tweet.

2) – No Junk Tweets

Every tweet needs to be worthwhile to keep the company’s Twitter feed on the must follow list for shareholders, potential shareholders, and analysts. No interview about Twitter usage is complete without the declaration that communications are important, and there are no tweets about what was eaten for dinner. Don’t let your tweets become the corporate equivalent of meal tweets.

3) – No Coupons, No Promos, No “Funny” News Links

Unless the IR group is the only official Twitter account for the entire corporation, chances are someone else is handling the smiley face side of social networking for the company. Investor relations is the most difficult Twitter communication channel there is. Don’t make it any harder by trying to be something else. Besides, the people you actually want following your IR tweet stream are serious about being shareholders, becoming shareholders, or analyzing the company. The followers you don’t want are the jokers, pranksters, agitators, looky-loos, or others who are not serious about investments in the company. Don’t give them a reason to follow you. Unlike other accounts that might be looking to increase exposure and publicity, if a IR tweet goes “viral” it is probably a bad thing.

4) Speak With Links – The 140 characters allowed for tweets posted to Twitter is too short to be useful for IR – Period – End of Story – No ifs ands or buts. It is too short. Never forget that.

The maximum protection from any legal or regulatory issue, plus the best way to avoid any misunderstanding or confusion, is to let links do the talking.

In an earlier article we discussed examples of Twitter trouble for IR. The carefully crafted statement and meticulously crafted wording in an official company statement about a recent dividend cut was not short enough to be tweeted. Trying to tease out a shorter, but equally accurate and legally sufficient tweet of 140 characters is liability suicide. However a tweet that directs Twitter users to the original statement is not only completely defensible, but incredibly easy.

Example IR Tweet:

@CrankyInvestor – Look here for that information about the dividend cut. http://bit.ly/6UKFaR

This tweet is well under 140 characters. It provides a link to a webpage with the original full length statement complete with all disclaimers and notices.

Notice the difference between a response to a Twitter user’s specific tweet and an unrelated random tweet about a new press release. Which brings us to…

5) Don’t Tweet Press Releases – Remember no junk tweets! If people wanted to read the company’s press releases whenever they just happened to come out, they would be reading them on the website, or more likely subscribed to either email delivery, RSS feed, or other notification. Tweeting a link to a press release or other information only when asked about, makes it a relevant and helpful tweet. Doing the same thing at 1:14 P.M. for a press release sent out at 1:13 P.M. makes it tweet-spam.

6) ALWAYS: “Look into,” “Check on,” “Investigate,” “Pass On” – Speed is what makes Twitter so powerful. It can also become intoxicating. Resist the temptation to fire off replies or other tweets at the spur of the moment. Twitter may be real-time, but it is not chat.

The reflex tweets sent right away are the ones that will end up causing trouble down the road. Unless you have already considered a similar reply and have a link at the ready, don’t tweet. If a reply is required, but none is ready, simply tweet that you will look into it and get back to them. For users that offer suggestions or other unsolicited advice or information, simply say that you will pass their comments on, or otherwise make sure the right people see them. Don’t promise anything.

@CrankyInvestor – I’ll check on that and let you know.

7) NEVER SAY: Promise, Guarantee, Never, Always, Obviously… – Certain words carry a literal meaning that you do not want associated with things you say on behalf of investor relations. These words include any form of promise, any form of complete exclusion (never) or complete inclusion (always). Also troublesome are words that imply that there is no question about something, or that something is common knowledge. These are standards the IR group does not want to be held to in a court room or regulatory action. Create a list of banned words and post them on every computer that will be used to send official tweets.

Be Careful With Re-Tweet – Recall all the hoops the IR department had to jump through to link out to another website while staying in compliance with all rules and regulations. Re-tweeting is just as dicey. Whenever possible, avoid it altogether.

These tips should get most IR groups up and running with a successful Twitter for business strategy. What comes next is being able to successfully manage Twitter conversations for businesses. For that, additional utilities and a little bit of advanced Twitter know how will be in order.

Complete Twitter Strategy Rules Guide for Investor Relations – Creating Official Corporate Tweets

Brian — Thu, 03 Dec 2009 09:30:28 +0000

Twitter mania is everywhere. Whether the quickly deafening crescendo heralds a change in the world’s communication paradigm, or the impending pop of the social networking bubble remains to be seen. What cannot be ignored is that businesses are embracing Twitter for the benefits they can gain from direct, real-time, two-way communication with consumers and business partners. It is only a matter of time before shareholders and company executives alike start asking, “Where is the company’s investor relations on Twitter?”

Twitter Is Different for IR

Jumping on the Twitter bandwagon and establishing a corporate presence is a simple task. The most difficult part of the whole process might be chasing someone off of the username that is the company’s registered trademark.

Otherwise, creating a Twitter account with a username, and typing in sub-140 character messages is a no-brainer. Bragging about company achievements, talking up new products, sending out links to coupons, or even just reminding the business’ followers about the company are par for the course when it comes to business Twitter usage.

Unfortunately, for the Investor Relations Department things are not so easy. There are legal pitfalls to Twitter for business use, as well as regulatory requirements for publicly traded companies on Twitter. Don’t forget, that the whole Twitter business is moot if the tweets the company sends out don’t add up to the kind of Twitter feed that people follow. Between the prospect of getting the company in legal trouble, developing a robust following, responding to shareholder concerns in a fast-moving forum, and just coming up with something to say in the company’s tweets, can tie the most technically savvy IR department in knots.

Fortunately, Twitter for Investor Relations can be broken down into an easily manageable process that provides tangible benefits for the corporation, the shareholders, and IR. This guide provides a step-by-step plan to get a business Twitter strategy running quickly. After all, quick communication is what Twitter is all about.

Rules and Strategy Guide to Twitter for Business Investor Relations

1) – Tweet Officially

a) Link to Official Twitter Account – Don’t make shareholders or analysts guess about your intentions. If you are going to use Twitter or other social networks to communicate with shareholders and others, make it official. Have a link directly from the Investor Relations landing page to the IR Twitter account along with a statement that this is the official Twitter account for corporate IR news. You don’t have to explicitly say it, but the implication is that anything else out there on Twitter, is rumor, innuendo, or speculation from non-official sources.

b) Have a Specific Twitter Account For Investor Relations – Do not use an umbrella corporate Twitter account. Do not share a Twitter username with any other department or purpose other than Investor Relations. Any lawyer with 5 minutes of experience knows that the quickest way to defeat legal protections is to show examples where these were violated, ignored, or otherwise misused or unused. In other words, your carefully crafted disclaimers, tweets, and links will all be for naught if the marketing guys throw up even a single tweet with hyperbole that proves not every precaution to ensure all information posted on Twitter is accurate. Use an IR only account and include IR or some other identifier in its name.

2) Create A Disclaimer Specifically for Twitter – The temptation to just use one of the standard disclaimers for Twitter is understandable. However, Twitter is unlike any other form of communication already engaged in, and it needs its own disclaimer. Do include as much of the standard boilerplate disclaimers as necessary, but also include Twitter specific information.

3) Post Twitter Disclaimers – Immediately next to your link to the official Twitter account, place a Twitter disclaimer. There will actually be two Twitter disclaimers required. The first is the short and sweet one that goes with the official link to the official Twitter account. The second is the one that is as long as the lawyers want it to be. The last sentence of the short one should be an “important note” that this is only the quick disclaimer and a link to the full disclaimer.

4) Create Twitter Terms of Use or Twitter Terms and Conditions – Disclaimers are one thing. Terms or Conditions of usage are another. Draw up Twitter specific terms to help protect the company against mistakes. Wal-mart created a stir with its laundry list of terms, which it has relabeled as “Twitter Discussion Guidelines.” The provide an excellent starting point for creating Twitter TOS.

5) Require Acceptance of the TOS or TOC – The software industry pioneered the concept of forcing consumers to agree to something without actually asking. CDs or Floppy Disks came in envelopes that said by opening the envelope you agreed to a whole list of terms and conditions. U.S. Courts have repeatedly upheld these “contracts” as valid. Do the same thing for your Twitter account. Use the “Bio” section to include a sentence which states that following or reading the posts on Twitter constitute acceptance of your terms of use.

6) Accept Limitations on These Safety Features – Disclaimers and Terms and Conditions can go a long way toward shutting the door on many avenues of liability. However, what stands up against a tort claim in court, and what stands up against the actions of a governmental regulatory agency such as the SEC, are two very different things. However, do not neglect these important safeguards. For every avenue of attack the company eliminates, the less chance there is for something to “stick.” – Following the rest of this IR Twitter guide will help provide more legal and regulatory protection.

With official Twitter accounts, disclaimers, and terms in place, the company’s investor relations department has done everything it can reasonably be expected to do in order to protect the company from unforeseen Twitter liability issues. Now, investor relations is ready to Tweet. What to tweet and how to keep what IR posts on Twitter from causing trouble is the next piece of Twitter strategy to get into place. Getting the corporate IR Twitter posting strategy right is next.